Which One of the Following Is Correct Concerning Bond Prices

question 342

Multiple Choice

Which one of the following is correct concerning bond prices?

• A) All else equal, a 12% bond will sell at a higher price than a 10% bond.
• B) The price of a short-term bond is more sensitive to interest rate changes than the price of a Long-term bond.
• C) The price of a zero coupon bond is less sensitive to interest rate changes than the price of a coupon bond.
• D) Bond prices tend to fluctuate more the less time to maturity.
• E) Movements in bond prices are directly related to movements in the market rate of interest.

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Definitions:

Exchange

Refers to a marketplace where securities, commodities, derivatives, and other financial instruments are traded.

Listed Stocks

Shares of companies that are publicly traded on a stock exchange, making them available for purchase by investors.

Privately Held Stocks

Shares that are owned by private investors, not available for trading by the general public on stock exchanges.

NASDAQ

A worldwide online market for the purchase and sale of securities, in addition to being the reference index for technology stocks in the United States.